British online real estate agency Hatched.co.uk has ceased operations because Internet-only estate agency businesses are “fundamentally flawed”.
Hatched.co.uk operated on a fixed-fee business model compared with the more traditional commission fee structure.
Its parent company, Connells Group – one of the UK’s largest real estate firms, said yesterday that the online-only agency had been immediately closed because its operating model is not commercially viable.
Chief Executive David Plumtree said: “We have thoroughly tested the hybrid model and have reached the conclusion that it does not produce a viable economic result – evidenced by the results of those operating in this sector – and with the cost of customer acquisition being one of the main barriers to being able to deliver a profitable return.”
He added: “There is much talk of disruption from hybrid estate agents, but from our experience we have found it significantly lacking when compared with the level of customer service, support and expertise that our high street operations provide.”
He said that ultimately, an upfront fee – payable irrespective of whether a property sells or not – is not the right solution for the customer.”
“Face-to-face accessibility, intimate local market knowledge, a progressive digital offering, dedicated sales progression – and not just a focus on winning instructions – undisputedly works best for our customers and is becoming increasingly essential in a more challenging marketplace.”
Hatched was one of the first online-only real estate agencies to open in the UK more than 12 years ago.
It offered home owners the opportunity to sell their homes starting from GBP 495 (THB 21,200) or GBP 895 (THB 38,400) for its ‘enhanced’ package.
It collected the fees before starting to sell the property.
Information from its website explained: “Traditional real estate agents typically work on a ‘No Sale, No Fee’ basis. This means they can end up doing a lot of work for nothing and therefore have to charge the successful sellers more in order to cover the costs of those sellers who don’t end up selling.”
“By charging upfront fees as we do, each seller is paying for the work that is being done and so we don’t have to worry about covering the cost of those that don’t sell.”
Hatched.co.uk operated in a way unlike current traditional real estate business models where an agent looks after a property.
Its website stated: “In our experience from working with high street agents in the past, having a single agent assigned to a property can be more of a hassle than a benefit. What happens when that agent is off sick or on holiday?”
At Hatched, our head office team are in constant communication with each other and our property management system keeps track of all the notes so everybody knows what’s going on, all the time.”
Sellers could pay more for a dedicated named “account manager” to be their single point of contact.